risk ahead or risk behind?

“Only after the ship has sunk does everyone know how it might have been saved.”​

Healthcare is changing at an incredible pace. Identifying what’s relevant and prioritizing the changes that will impact a hospital is an enormous challenge for a hospital’s leadership. Unfortunately, many hospitals, especially rural hospitals, are not able to mitigate the problems successfully.

One of the reasons for this is that hospital executives spend too much time talking about historical problems and what they did instead of looking ahead to the future and mitigating risks in their strategy and mission. Sure, the leadership gained valuable understanding about what went wrong and what controls should have been in place, but those same controls are about correcting a problem and not preventing it. In essence, the leadership is managing their hospitals retrospectively. The resources and activities applied to the hospitals are correct from a historical perspective but not from a future perspective. Sadly, many hospitals have the appropriate controls in place to mitigate risk for the wrong time period.

Managing risk is about identifying threats and opportunities that may help or prevent the organization from achieving its strategy and ultimately its vision. Performing a quantitative risk assessment on the known changes that will affect the hospital allows for appropriate mitigation and contingency planning. By doing this, hospitals will have a proactive approach versus a reactive approach to managing risk.

To be effective, risk management must live and breathe within the hospital. It cannot live with a person or department. The risks identified at the board level must cascade down and be understood within each of the service lines, especially the contracted or outsourced services. To do this well, an understanding of how the risks will affect the organization is necessary. Leadership always thinks financially. Risk is more than just financial. How will this affect the strategy, patient care, and the ability to maintain compliance? Failing to identify and provide controls to these different levels is a shortsighted approach.

'What should we have done differently?' is a common question asked after an incident. As the saying goes, hindsight is always 20/20. If leadership continues to spend the majority of their time discussing historical events and the lessons learned from them, they are likely missing necessary changes and are destined to live in a reactionary cycle of corrections. Until leadership acknowledges their problems stem from having a poor risk strategy, many more hospitals are destined for closure.